[2004]JRC138
royal court
(Samedi Division)
9th August 2004
Before: |
P.R. Le Cras, Esq., Commissioner and Jurats Allo and Newcombe. |
Between |
The Viscount |
Representor |
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And |
HSBC Bank plc |
First Respondent |
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And |
Abacus (C.I.) Ltd |
Second Respondent |
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And |
Kevin Ronald Leech |
Third Respondent |
IN THE MATTER OF
the désastre of Kevin Ronald Leech, Third Respondent.
Representations by the Viscount: (1) for directions; and (2) for an Order, under Article 40(1) of the Bankruptcy (Désastre) (Jersey) Law 1990 as to the discharge of the debtor from the désastre.
Advocate N.F. Journeaux for the Representor.
Advocate A.J. Olsen for the First Respondent.
Advocate F.B. Robertson for the Second Respondent.
Advocate M.L. Preston for the Third Respondent.
judgment
the COMMISSIONER:
1. The Court has sat today on two applications by the Viscount, first for directions in the désastre of Mr. K.R. Leech and second as to his discharge from these proceedings.
2. The désastre was declared as a result of the sudden collapse in the value of Mr. Leech's shareholdings, which came, it would appear, as a complete surprise to him and to his main bankers, HSBC. His debts amounted, in round terms, to some £90 million, and the claim by HSBC to some £88 million, or 97% of the total.
3. Following a failed attempt at an arrangement with HSBC, a désastre was declared on 9th October, 2002.
4. The costs of the désastre were funded by HSBC, who it seems loaned the money to the Viscount, and it became apparent that, if the désastre proceeded in the normal way, there would be little enough for HSBC and nothing for the other creditors. The costs incurred to date already amount the Court was told to some £2 million.
5. In the light of this, and at the request and with the assent of Mr. Leech, and following lengthy and complex negotiations, a series of agreements, conditional at present, have been reached between the Viscount, Abacus (the Trustee), HSBC and Mr. Leech.
6. If the agreements are not concluded, HSBC will cease to fund the désastre.
7. In broad terms:
(a) The Trustee commits the sum of £5.1 million, and purchases the debts of the accepting creditors;
(b) The various assets of Mr. Leech which the Viscount did not find worth pursuing were sold to the Trustee for £75,000 (the désastre excluded assets);
(c) Mr. Leech has placed in trust any undeclared or forgotten assets for the benefit of his creditors;
(d) Subject to quantum verification all those accepting creditors with claims under £100,000 will be paid in full, subject to payment of costs pro rata. These are thought likely to be more than 3% but less than 5%;
(e) The balance including the excluded assets will be paid pro rata between those creditors claiming over £100,000 and are equally subject to quantum determination e.g. a claim by Barclays, another by Burger King and, of course, HSBC; and they equally will contribute pro rata to their costs.
(f) Quantum determination will be carried out by the Viscount, not ex officio but under the terms of the contract, assisted by Deloittes, with provision for an appeal.
8. The agreement of the Trustee is conditional however upon the Court discharging Mr. Leech from the désastre 6 months after the "Acquisition Date", expected, if the court so orders, to be 2 days hence. The Trustee takes the view that if it is to pay out such funds from the Trust there should be some benefit to the beneficiary.
9. The Trustee accepts, as indeed it must, that such early discharge is entirely at the discretion of the Court.
10. In this regard, the Viscount has, whilst equally entirely accepting the discretion of the Court, come to the view that such a discharge is one which he recommends to the Court.
11. He forms this view on the basis that although he or his officers initially found Mr. Leech "difficult" - an allegation denied by Mr. Leech - and was "suspicious" of some of the transfers into Trust, he has come to the conclusion that there are no indications of any fraudulent or criminal conduct by Mr. Leech and that, given the proposed settlement, it is not worth contemplating proceedings under Article 17 of the law, a factor which the Court will assume has been taken into account by the Trustees, and that in the circumstances it is clearly in the interests of the creditors that the agreements, the one conditional upon the other and vice versa, should proceed.
12. The Court was advised that no objections had been received to the scheme which the Court finds is entirely to the benefit of all concerned and is one which the Court approves in its entirety.
13. We should, we think, add that these agreements reflect credit on HSBC who, having taken a severe and unanticipated loss, have, with the Viscount and it should be said the Trustee and Mr. Leech himself, ensured that the smaller creditors recover at least the major part of their quantified claims, and that a convenient and orderly distribution thus results.
14. Given these reasons, the Orders are made as requested.
No Authorities